Shares in Pressure Technologies fall in wake of profits warning

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GAS cylinder firm Pressure Technologies issued its second profits warning of the year as increased competition and higher costs took their toll.

The Sheffield-based company said that while turnover for the year to October 1 will be in line with market forecasts, profits will be “substantially below expectations”.

The group insisted its balance sheet remains strong and it is keeping a tight discipline on the management of cash flow.

Shares in the company closed down 14.5 per cent last night, a fall of 20p to 117.5p.

In April the company also warned over 2011 profits, as delays in the offshore oil and gas market hit trading.

Pressure said it plans to maintain its final dividend after ending its financial year with net funds of about £2.9m.

The company said a forecast upturn in Chesterfield Special Cylinders’ main market, supplying high-pressure vessel systems for deep water oil rigs and drillships, “appears to be underway”.

It has so far secured orders to supply six drillships in 2012, compared with three for the whole of its 2011 financial year.

“The pipeline of live quotations remains strong,” added the company, which expects this market to recover in the second half of its 2012 year.

However, Pressure said competition has increased, which has squeezed margins.

“In response to the changing marketplace, projects are under way to enhance gross margins and reduce fixed costs,” it said.

Pressure said it has revised down its expectations for growth at Al-Met, part of its engineered products division.

“Significant growth for wear parts into the subsea market will not now take place until 2013 and we anticipate double digit growth in 2013 and 2014,” it said.

The company said that growth at its Chesterfield BioGas arm, which cleans waste methane for injection into the grid, has been slower than expected, also forcing the group to lower its expectations to this division for 2012. “Growth in 2012 will come principally from the engineered products division,” said the company.

“CSC is expected to show growth in the second half of 2012 into 2013.

“Major growth in the biogas business is now expected in 2013 rather than 2012.”

In June Pressure said the worst was behind it as the group anticipates a gradual increase in oil and gas work, plus a surge of orders for its biogas technology.

The company reported a £309,000 pre-tax loss in the 26 weeks to April 2 as the ripples from BP’s Deepwater Horizon oil spill in the Gulf of Mexico in April last year continued to dampen appetite for deepwater offshore oil and gas drilling.

Pressure makes products including high-pressure cylinders for use in offshore oil rigs.